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Search results could send Amazon to trial

Amazon.com Inc. must face a trademark-infringement suit by watchmaker Multi Time Machine Inc., which claims the online retailer’s search results can lead to confusion for consumers.

A 2-1 decision by the federal appeals court in Pasadena, Calif., reversed a lower court ruling that threw out Multi Time Machine’s lawsuit, according to a court filing Monday.

The appeals court said “a jury could find that Amazon had created a likelihood of confusion” because a search for MTM’s Special Ops watches will return a web page displaying the trademarked name—but only with similar products made by competitors. Amazon does not clarify or state that it doesn’t sell Multi Time Machine’s military-style watches. A shopper could get confused, believe there’s a partnership between MTM and the competitors listed, and buy a competitor’s watch, says Kevin Haley, a partner with Lewiston, Maine-based law firm Brann & Isaacson, who has defended e-retailers against trademark cases. This is known as initial interest confusion, a law that finds infringement if there is temporary confusion on the consumer’s part that is dispelled before purchase.

“We’ll have to determine if this confusion actually exists in the marketplace,” Haley says. “If it does, Amazon may have to stop engaging in presenting search results for products it doesn’t carry. Then, it may have to pay for damages to the watch company’s brand.”

The court faulted Amazon’s failure to clearly state that it doesn’t carry Multi Time Machine’s products. Off-price retail site Overstock.com and other online retailers “announce that no search results match the ‘MTM Special Ops’ query,” and they don’t take the customer to a page with MTM’s trademarks “repeatedly at the top and competitors’ watches below,” the court said.

In dissent, U.S. Appeals Court Judge Barry G. Silverman said he would have upheld the lower court’s ruling because the search results clearly display the competitors’ names along with the products.

The lawsuit will return to federal court in Los Angeles, where Multi Time Machine may press its claims. Haley says there is no time line for the claim to be heard, although “it will presumably play out in months.”

“We’re a long way from Amazon having to do anything procedurally,” Haley says.